EX-99 2 ex-99.htm EXHIBIT 99.1


FOR IMMEDIATE RELEASE

 

CURTISS-WRIGHT REPORTS FIRST QUARTER 2005 FINANCIAL
RESULTS

- - -

 

Sales up 20%; Backlog at Record Level; Reaffirms Full-Year Guidance

 

ROSELAND, NJ – April 28, 2005 – Curtiss-Wright Corporation (NYSE: CW, CW.B) today reports financial results for the quarter ended March 31, 2005. The highlights are as follows:

 

•

Net sales for the first quarter of 2005 increased 20% to $258.5 million from $214.9 million in the first quarter of 2004. Acquisitions made in 2005 and 2004 contributed $35.8 million in incremental sales in the first quarter of 2005.

 

•

Operating income in the first quarter of 2005 decreased 3% to $24.6 million from $25.3 million in the first quarter of 2004. Acquisitions made in 2005 and 2004 contributed $0.1 million in incremental operating income in the first quarter of 2005.

 

•

Net earnings for the first quarter of 2005 decreased 7% to $14.5 million, or $0.67 per diluted share, from $15.6 million, or $0.74 per diluted share, in the first quarter of 2004. Net earnings for the first quarter of 2005 include a net after tax gain of $1.5 million (approximately $0.07 per diluted share), related to the sale of non-operating property. In addition, the net earnings for the first quarter of 2004 included nonrecurring tax benefits of $1.5 million (approximately $0.07 per diluted share).

 

•

New orders received in the first quarter of 2005 were $325.8 million, up 38% compared to the first quarter of 2004.

 

•

Backlog reached a new record high level of $748.2 million, up 19% from $627.7 million at December 31, 2004.

 

 

 

 


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“We are pleased to report continued sales growth in 2005 and again attaining a new record level of backlog,” commented Martin R. Benante, Chairman and CEO of Curtiss-Wright Corporation. “Our new orders were strong in both the first quarter of 2005 and fourth quarter of last year which provides us with good momentum for the rest of the year. We experienced strong organic sales and operating income growth of 13% and 17%, respectively, from our Metal Treatment segment in the first quarter of 2005. In addition, we also had strong organic sales growth in the oil and gas, commercial aerospace, and power generation markets. Many of our military programs are in the early stages of the procurement cycle and the ramp-up in the second half of the year will improve those margins. In addition, we recently won several developmental contracts that have begun but generally produce lower margins than production contracts; however, these contracts should provide us future opportunities. We are continuing to integrate our acquisitions and experience some business consolidation costs during the first quarter. However, we expect these integration efforts to lead to reduced costs and improved profitability in the future.”

 

Sales

 

Sales growth in first quarter of 2005 as compared to the prior year period was mainly driven by the contributions from our 2004 and 2005 acquisitions. Acquisitions made in 2004 and 2005 contributed $35.8 million in incremental sales for the quarter ended March 31, 2005 over the comparable period in 2004. The base businesses generated overall organic growth of 4% in the first quarter of 2005. This organic sales growth was driven by our Metal Treatment and Motion Control segments, which experienced organic growth of 13% and 5%, respectively, compared to the prior year period. Our Flow Control segment’s organic sales declined 1% in the first quarter of 2005 as compared to the prior year period.

 

In our base businesses, higher sales from our Metal Treatment segment of global shot peening services, higher global commercial aerospace and general industrial sales from our Motion Control segment, and higher sales from our Flow Control segment to the oil and gas and commercial power generation markets, all contributed to the organic growth. In addition, foreign currency translation favorably impacted sales by $2.2 million for the quarter ended March 31, 2005, compared to the prior year period.

 

Operating Income

 

Operating income for the first quarter of 2005 decreased 3% over the comparable prior year period. The decline was due to lower organic operating income of 2%, offset somewhat by our 2004 and 2005 acquisitions, which contributed $0.1 million of incremental operating income in the first quarter of 2005. The decline in organic operating income was caused primarily by unfavorable sales mix in our Flow Control and Motion Control segments. This decline was partially offset by organic operating income growth of 17% in the Metal Treatment segment. Operating income was also negatively impacted by $0.5 million higher pension expense from the Curtiss-Wright pension plans in the first quarter 2005 as compared to the prior year. In addition, foreign currency translation favorably impacted operating income by $0.4 million for the first quarter 2005, as compared to the prior year period.

 

 


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Net Earnings

 

Net earnings decreased 7% for the quarter ended March 31, 2005, from the comparable prior year period. Net earnings for the first quarter of 2005 include a net after tax gain of $1.5 million (approximately $0.07 per diluted share), related to the sale of non-operating property. Higher interest expense, due to both higher debt levels and higher interest rates, lowered net earnings in the first quarter of 2005. In addition, net earnings for the first quarter of 2004 included nonrecurring tax benefits of $1.5 million (approximately $0.07 per diluted share).

 

Segment Performance

 

Flow Control – Sales for the first quarter of 2005 were $109.4 million, up 22% over the comparable period last year due to contributions from the 2004 acquisitions. This segment experienced an overall decline in organic growth of 1% primarily resulting from lower overall sales to the U.S. Navy due to timing of customer driven delivery schedules, offset partially by higher sales to the oil and gas and commercial power generation markets. Sales of this business segment also benefited from favorable foreign currency translation of $0.4 million in the first quarter of 2005 compared to the prior year period.

 

Operating income for this segment decreased 1% in the first quarter of 2005 compared to the prior year period. The decline was due to the lower sales volume to the U.S. Navy, decreased higher margin spares sales to the oil and gas market, increased sales of generic electronics products and development programs, which generate lower margins, mostly offset by contributions from the 2004 acquisitions.

 

Motion Control – Sales for the first quarter of 2005 of $100.1 million increased 20% over last year, principally due to the contributions from the 2004 and 2005 acquisitions. Sales from the base businesses increased 5% in the first quarter of 2005 as compared to the prior year period. This organic growth increase was due primarily to higher sales of industrial sensor products, higher sales of electronic products for military helicopters and mobile gun systems, and higher sales of OEM and spares products and repair and overhaul services to the commercial aerospace market, as compared to the prior year period. Partially offsetting these increases are lower sales of F-16 spares, and lower sales of tilting train systems in Europe due to expiration of this program in 2004. Sales of this business segment also benefited from favorable foreign currency translation of $1.0 million in the first quarter of 2005 as compared to the prior year period.

 

Operating income for this segment decreased 23% for the first quarter of 2005 compared to the prior year period. The decline was driven primarily by decreased higher margin sales, such as the F-16 spares and tilting train program, and higher development work which generates lower margins. In addition, this segment experienced increased business consolidation costs, primarily in the embedded computing group, which are anticipated to produce reduced costs and improved profitability in the future.

 

 


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Metal Treatment – Sales for the first quarter of 2005 of $49.0 million were 16% higher than the comparable period last year. The improvement was mainly due to organic growth of 13% driven by higher global shot peening revenues from the aerospace and automotive markets. Favorable foreign currency translation positively impacted sales by $0.8 million in the first quarter of 2005 as compared to the prior year period.

Operating income increased 19% for the first quarter of 2005 as compared to the prior year period, primarily as a result of the higher sales volume. The 2004 acquisitions and favorable foreign currency translation also contributed to the increase in operating income.

 

2005 Management Guidance

 

We reaffirm our 2005 full-year guidance of revenues in the range of $1.05 billion to $1.10 billion; operating income in the range of $130 - $138 million, which includes $2 million of pension expense from the Curtiss-Wright pension plan; and earnings per share in the range of $3.24 to $3.45 per share. This guidance reflects our expectations of 10-15% growth in revenue, 15-20% growth in operating income, and 10–15% growth in EPS, excluding $0.16 per share of nonrecurring tax benefits reported in 2004.

 

Full year free cash flow (defined as cash flow from operating activities less capital expenditures) is expected to be between $55 and $60 million for 2005.

 

EPS guidance is based on estimated fully diluted shares outstanding of 22 million shares for the full year 2005. 2005 guidance includes an estimate for costs associated with the continuation of Sarbanes-Oxley compliance, but it does not assume any acquisitions completed in 2005.

 

Mr. Benante concluded, “Much of our revenues are dependant upon customer delivery schedules which result in variability from quarter to quarter. We anticipated and previously indicated that our first quarter would be the lightest in 2005 and we have reaffirmed our full year 2005 guidance. Our backlog is strong and at a new record level. In 2005, we should once again demonstrate our ability to generate long-term shareholder value by growing our sales and earnings. Over the past several years our operating income has been growing faster than our sales while we executed a very active, yet disciplined, acquisition program. Our historical performance demonstrates our ability to execute our strategy and achieve our financial targets. We continue to experience increasing demand for our new technologies, many of which are only at the beginning of their life cycles, which should continue to provide superior returns to our shareholders into the future. Our diversification strategy, the continued successful integration of our acquisitions, and ongoing emphasis on technology will continue to generate growth opportunities in each of our three business segments in 2005 and beyond.”

**********

The Company will host a conference call to discuss the first quarter 2005 results at 9:00 EST Friday, April 29, 2005. A live webcast of the call can be heard on the Internet by visiting the company’s website at www.curtisswright.com and clicking on the investor information page or by visiting other websites that provide links to corporate webcasts.

 

(Tables to Follow)

 

 


Curtiss-Wright Corporation, Page 5


CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)

     
Three Months Ended
March 31,
 
Three Months
Change
 
                 
     
2005
2004
$
%
  
     
 
 
 
 
                     
Net sales     $ 258,487   $ 214,933   $ 43,554     20.26 %
Cost of sales       172,718     143,338     29,380     20.50 %
       
   
   
       
  Gross profit       85,769     71,595     14,174     19.80 %
Research & development expenses       10,228     8,212     2,016     24.55 %
Selling expenses       16,924     12,604     4,320     34.27 %
General and administrative expenses       33,468     25,249     8,219     32.55 %
Environmental remediation and administrative    
   expenses, net       83     240     (157 )   -65.42 % 
Pension expense (income), net       500     40     460     1150.00 %
       
   
   
       
  Operating income       24,566     25,250     (684 )   -2.71 % 
Other income (expenses), net       2,789     (489 )   3,278     -670.35 % 
Interest expense       (4,303 )   (2,265 )   (2,038 )   89.98 %
       
   
   
       
Earnings before income taxes       23,052     22,496     556     2.47 %
Provision for income taxes       8,529     6,887     1,642     23.84 %
       
   
   
       
Net earnings     $ 14,523   $ 15,609     ($ 1,086 )   -6.96 % 
       
   
   
       
Basic earnings per share     $ 0.68   $ 0.75              
       
   
             
Diluted earnings per share     $ 0.67   $ 0.74              
       
   
             
Dividends per share     $ 0.09   $ 0.09              
       
   
             
Weighted average shares outstanding:    
   Basic       21,511     20,881              
   Diluted       21,814     21,206              

Curtiss-Wright Corporation, Page 6


CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

     
March 31,
2005
December 31,
2004
Change
  
$
%
     
 
 
 
 
Assets                    
  Current Assets:    
     Cash and cash equivalents     $ 41,783   $ 41,038   $ 745     1.8 %
     Receivables, net       251,917     214,084     37,833     17.7 %
     Inventories, net       128,144     115,979     12,165     10.5 %
     Deferred income taxes       23,699     25,693     (1,994 )   -7.8 % 
     Other current assets       11,923     12,460     (537 )   -4.3 % 
       
   
   
       
       Total current assets       457,466     409,254     48,212     11.8 %
       
   
   
       
  Property, plant, and equipment, net       269,235     265,243     3,992     1.5 %
  Prepaid pension costs       77,313     77,802     (489 )   -0.6 % 
  Goodwill, net       392,240     364,313     27,927     7.7 %
  Other intangible assets, net       155,872     140,369     15,503     11.0 %
  Other assets       14,565     21,459     (6,894 )   -32.1 % 
       
   
       
       Total Assets     $ 1,366,691   $ 1,278,440   $ 88,251     6.9 %
       
   
   
       
     
Liabilities    
  Current Liabilities:    
     Short-term debt     $ 981   $ 1,630   $ (649 )   -39.8 % 
     Accounts payable       64,158     65,364     (1,206 )   -1.8 % 
     Accrued expenses       47,245     63,413     (16,168 )   -25.5 % 
     Income taxes payable       18,324     13,895     4,429     31.9 %
     Other current liabilities       52,405     52,793     (388 )   -0.7 % 
       
   
   
       
       Total current liabilities       183,113     197,095     (13,982 )   -7.1 % 
  Long-term debt       419,083     340,860     78,223     22.9 %
  Deferred income taxes       46,934     40,043     6,891     17.2 %
  Accrued pension & other postretirement benefit costs       82,317     80,612     1,705     2.1 %
  Long-term portion of environmental reserves       24,194     23,356     838     3.6 %
  Other liabilities       22,651     20,860     1,791     8.6 %
       
   
   
       
       Total Liabilities       778,292     702,826     75,466     10.7 %
       
   
   
       
     
Stockholders' Equity    
  Common stock, $1 par value       16,682     16,646     36     0.2 %
  Class B common stock, $1 par value       8,765     8,765     0     0.0 %
  Capital surplus       56,005     55,885     120     0.2 %
  Retained earnings       613,649     601,070     12,579     2.1 %
  Unearned portion of restricted stock       (28 )   (34 )   6     -17.6 % 
  Accumulated other comprehensive income       33,004     36,797     (3,793 )   -10.3 % 
       
   
   
       
        728,077     719,129     8,948     1.2 %
  Less: cost of treasury stock       139,678     143,515     (3,837 )   -2.7 % 
       
   
   
       
       Total Stockholders' Equity       588,399     575,614     12,785     2.2 %
       
   
   
       
       Total Liabilities and Stockholders' Equity     $ 1,366,691   $ 1,278,440   $ 88,251     6.9 %
       
   
   
       

Curtiss-Wright Corporation, Page 7


CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
SEGMENT INFORMATION
(In thousands)

     
Three Months Ended March 31,
  
     
 
     
2005
2004
%
Change
 
     
 
 
 
Sales:                      
Flow Control     $ 109,413   $ 89,395     22.4 %
Motion Control       100,084     83,344     20.1 %
Metal Treatment       48,990     42,194     16.1 %
  
                       
Total Sales     $ 258,487   $ 214,933     20.3 %
     
Operating Income:    
Flow Control     $ 10,349   $ 10,431     -0.8 %
Motion Control       6,390     8,289     -22.9 %
Metal Treatment       7,817     6,577     18.9 %
  
     
Total Segments       24,556     25,297     -2.9 %
Pension (Expense)/Income       (500 )   (40 )   1150.0 %
Corporate & Other       510     (7 )   -7385.7 %
  
  
Total Operating Income     $ 24,566   $ 25,250     -2.7 %
  
     
     
Operating Margins:    
Flow Control       9.5 %   11.7 %      
Motion Control       6.4 %   9.9 %      
Metal Treatment       16.0 %   15.6 %      
Total Curtiss-Wright       9.5 %   11.7 %      

Curtiss-Wright Corporation, Page 8

 

 

About Curtiss-Wright

 

Curtiss-Wright Corporation is a diversified company headquartered in Roseland, New Jersey. The Company designs, manufactures and overhauls products for motion control and flow control applications and provides a variety of metal treatment services. The firm employs approximately 5,800 people. More information on Curtiss-Wright can be found at www.curtisswright.com.

 

###

 

Forward-looking statements in this release are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to: a reduction in anticipated orders; an economic downturn; changes in competitive marketplace and/or customer requirements; a change in government spending; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the business of aerospace, defense contracting, electronics, marine, and industrial companies. Please refer to the Company’s current SEC filings under the Securities and Exchange Act of 1934, as amended, for further information.

 

This press release and additional information is available at www.curtisswright.com.

 

Contact:

Alexandra M. Deignan

 

 

(973) 597-4734

 

 

adeignan@curtisswright.com